US housing starts slump; US consumer confidence up; China reduces UST holdings; China rail volume growth slips; BEPS gets serious; ASEAN resists China's B&R risks; UST 10yr at 2.85%; oil up, gold down; NZ$1 = 72.2 USc; TWI-5 = 73.4

Here's our summary of key events over the weekend that affect New Zealand, with news regional governments are starting to organise some push-back against China's Belt & Road initiative.

Firstly however, there is a range of data out in the US pointing to varying outcomes.

Housing starts dropped sharply in February and were -4% lower than the same month a year ago. That is a drop of -50,000 new houses worth some US$12.5 bln and not insignificant.

But overall industrial production was up +4.4% in February from a year ago, and well above analysts expectations of a 0.3% gain. That gain brought quite a strong rise in capacity utilisation and its highest since January 2015.

And consumer confidence is rising with one survey at its highest level since 2004 and a new record high. Driving this is the immediate expectation of conditions. But consumers are wary of longer-term consequences of current policies, with that part of the index dropping.

The latest data shows that China is slowly reducing its holdings of US Treasury debt. All up, foreigners hold US$6.3 tln of this debt or 30% of the total $20.9 tln but US$5.7 tln of that is intergovernmental holdings. So of the debt held by the public, this foreign holding is 41.3%, of which China holds 7.8% and Japan holds 7.0%, both levels too small to be a serious security threat to the Americans.

In China, a good proxy for real activity is their rail volume activity which increased +8.2% in February from the same month in 2017, although that was down from a +9.4% year-on-year increase in January.

More than 100 countries have agreed to try and get an international consensus on how to tax digital businesses across borders as part of the BEPS initiatives - all in the next two years. Trying is one thing, but getting agreement may be tough. However, the EU is proposing a 3% tax on their revenues and may do that on their own.

In Russia, their central bank is shoring up two financial institutions hit by international sanctions over Crimea violations. It will cost the Russians up to 3.8% of their GDP to protect these two banks. It comes at a tricky time for Russia who is facing new sanctions after their chemical attack in the UK.

In Australia, their Reserve Bank has warned investors that a shift higher in global interest rates could impact other asset classes as major governments shift from net buyers to net sellers of bonds.

And staying in Australia, They are joining with ASEAN to push-back against China's dominance of infrastructure funding and the influence across the region. The plan is to design new regional development projects free of China's influence and debt-traps, partly fund them with private sector and regional institutions like the Asian Development Bank, and keep them competitive with subsidies in national aid budgets. They are being helped by increasing wariness of the price China expects for its brand of largess.

In New York, the UST 10 yr yield will start the week a little higher at 2.85%. Interestingly, New Zealand is not seen as particularly vulnerable to rising interest rates, but among those that are is Australia. It is all to do with exposure to floating rates.

The gold price has slipped again, down -US$4 and now at US$1,314/oz.

Oil prices are up marginally today with the US benchmark just over US$62/bbl and the Brent benchmark now just over US$66/bbl.

The Kiwi dollar will start today ½c lower at 72.2 USc. On the cross rates we are unchanged at 93.6 AUc and 58.7 euro cents. That puts the TWI-5 at 73.4.

Bitcoin is now at US$7,460, down -8.7% from this time on Friday. It has been slipping steadily all weekend and is now at its lowest in more than six weeks.

This chart is animated here. For previous users, the animation process has been updated and works better now.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».